Free To Choose: a personal Statement

Cradle to Grave
93
These two strands were already present in a famous novel pub-
lished in 1887, Looking Backward by Edward Bellamy, a utopian
fantasy in which a Rip Van Winkle character who goes to sleep
in the year 1887 awakens in the year 2000 to discover a changed
world. "Looking backward," his new companions explain to him
how the utopia that astonishes him emerged in the 1930s—a
prophetic date—from the hell of the I880s. That utopia involved
the promise of security "from cradle to grave"—the first use of
that phrase we have come across—as well as detailed government
planning, including compulsory national service by all persons
over an extended period.'
Coming from this intellectual atmosphere, Roosevelt's advisers
were all too ready to view the depression as a failure of capitalism
and to believe that active intervention by government—and espe-
cially central government
was the appropriate remedy. Benevo-
lent public servants, disinterested experts, should assume the
power that narrow-minded, selfish "economic royalists" had
abused. In the words of Roosevelt
'
s first inaugural address, "The
moneychangers have fled from the high seats in the temple of our
civilization."
In designing programs for Roosevelt to adopt, they could draw
not only on the campus, but on the earlier experience of Bis-
marck
'
s Germany, Fabian England, and middle-way Sweden.
The New Deal, as it emerged during the 1930s, clearly reflected
these views. It included programs designed to reform the basic
structure of the economy. Some of these had to be abandoned
when they were declared unconstitutional by the Supreme Court,
notably the NRA (National Recovery Administration) and the
AAA (Agricultural Adjustment Administration). Others are still
with us, notably the Securities and Exchange Commission, the Na-
tional Labor Relations Board, nationwide minimum wages.
The New Deal also included programs to provide security
against misfortune, notably Social Security (OASI: Old Age and
Survivors Insurance), unemployment insurance, and public as-
sistance. This chapter discusses these measures and their later
progeny.
The New Deal also included programs intended to be strictly
temporary, designed to deal with the emergency situation created

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FREE TO CHOOSE: A Personal Statement
by the Great Depression. Some of the temporary programs be-
came permanent, as is the way with government programs.
The most important temporary programs included "make
work" projects under the Works Progress Administration, the use
of unemployed youth to improve the national parks and forests
under the Civilian Conservation Corps, and direct federal relief
to the indigent. At the time, these programs served a useful func-
tion. There was distress on a vast scale; it was important to do
something about that distress promptly, both to assist the people
in distress and to restore hope and confidence to the public. These
programs were hastily contrived, and no doubt were imperfect and
wasteful, but that was understandable and unavoidable under the
circumstances. The Roosevelt administration achieved a consider-
able measure of success in relieving immediate distress and re-
storing confidence.
World War II interrupted the New Deal, while at the same
time strengthening greatly its foundations. The war brought mas-
sive government budgets and unprecedented control by govern-
ment over the details of economic life: fixing of prices and wages
by edict, rationing of consumer goods, prohibition of the produc-
tion of some civilian goods, allocation of raw materials and
finished products, control of imports and exports.
The elimination of unemployment, the vast production of war
materiel that made the United States the "arsenal of democracy,"
and unconditional victory over Germany and Japan—all these
were widely interpreted as demonstrating the capacity of govern-
ment to run the economic system more effectively than "unplanned
capitalism." One of the first pieces of major legislation enacted
after the war was the Employment Act of 1946, which expressed
government's responsibility for maintaining "maximum employ-
ment, production and purchasing power" and, in effect, enacted
Keynesian policies into law.
The war's effect on public attitudes was the mirror image of the
depression's. The depression convinced the public that capitalism
was defective; the war, that centralized government was efficient.
Both conclusions were false. The depression was produced by a
failure of government, not of private enterprise. As to the war, it
is one thing for government to exercise great control temporarily

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Cradle to Grave
95
for a single overriding purpose shared by almost all citizens and
for which almost all citizens are willing to make heavy sacrifices;
it is a very different thing for government to control the economy
permanently to promote a vaguely defined "public interest" shaped
by the enormously varied and diverse objectives of its citizens.
At the end of the war it looked as if central economic planning
was the wave of the future. That outcome was passionately wel-
comed by some who saw it as the dawn of a world of plenty shared
equally. It was just as passionately feared by others, including us,
who saw it as a turn to tyranny and misery. So far, neither the
hopes of the one nor the fears of the other have been realized.
Government has expanded greatly. However, that expansion
has not taken the form of detailed central economic planning ac-
companied by ever widening nationalization of industry, finance,
and commerce, as so many of us feared it would. Experience put
an end to detailed economic planning, partly because it was not
successful in achieving the announced objectives, but also because
it conflicted with freedom. That conflict was clearly evident in the
attempt by the British government to control the jobs people could
hold. Adverse public reaction forced the abandonment of the
attempt. Nationalized industries proved so inefficient and gener-
ated such large losses in Britain, Sweden, France, and the United
States that only a few die-hard Marxists today regard further
nationalization as desirable. The illusion that nationalization in-
creases productive efficiency, once widely shared, is gone. Addi-
tional nationalization does occur—passenger railroad service and
some freight service in the United States, Leyland Motors in
Great Britain, steel in Sweden. But it occurs for very different
reasons—because consumers wish to retain services subsidized
by the government when market conditions call for their curtail-
ment or because workers in unprofitable industries fear unemploy-
ment. Even the supporters of such nationalization regard it as at
best a necessary evil.
The failure of planning and nationalization has not eliminated
pressure for an ever bigger government. It has simply altered its
direction. The expansion of government now takes the form of
welfare programs and of regulatory activities. As W. Allen Wallis
put it in a somewhat different context, socialism, "intellectually

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bankrupt after more than a century of seeing one after another
of its arguments for socializing the means of production demol-
ished—now seeks to socialize the results of production."